(a)(1) A political subdivision that is not otherwise participating under any of the plans afforded under chapters 34-37 of this title may, by resolution legally adopted and approved by its chief governing body and in accordance with the procedure set out in § 8-35-201 , authorize its employees in all of its departments or instrumentalities to become eligible to participate in the hybrid plan. Membership in the hybrid plan for employees of political subdivisions that are admitted into the hybrid plan pursuant to this subsection (a) shall be:
(A)Optional for all employees in the service of the political subdivision on the date the approval is given, except as provided in subdivisions (a)(2) and (3); and (B) Mandatory for all eligible employees entering the service of the political subdivis
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(a) (1) A political subdivision that is not otherwise participating under any of the plans afforded under chapters 34-37 of this title may, by resolution legally adopted and approved by its chief governing body and in accordance with the procedure set out in § 8-35-201 , authorize its employees in all of its departments or instrumentalities to become eligible to participate in the hybrid plan. Membership in the hybrid plan for employees of political subdivisions that are admitted into the hybrid plan pursuant to this subsection (a) shall be: (A) Optional for all employees in the service of the political subdivision on the date the approval is given, except as provided in subdivisions (a)(2) and (3); and (B) Mandatory for all eligible employees entering the service of the political subdivision thereafter; provided, however, and except as provided in subdivision (a)(3), membership shall not be required for any part-time employee who would otherwise be covered under this part, or for any employee who has optional membership in the retirement system pursuant to chapters 34-37 of this title. Any election made by an employee to become a participant shall be irrevocable and such employee shall thereafter be subject to the terms and conditions of the hybrid plan. (2) (A) If the political subdivision continues to maintain a preexisting pension plan that is closed to new membership on the date of the political subdivision's participation date in the hybrid plan, the political subdivision may, by resolution duly adopted by its chief legislative body, authorize its current employees who participate in the preexisting plan the choice of maintaining membership in the preexisting plan or joining the hybrid plan; provided, that allowing such choice meets all applicable state and federal requirements, including § 414(h) of the Internal Revenue Code ( 26 U.S.C. § 414(h) ), that are necessary for the hybrid plan to maintain its status as a qualified plan under the Internal Revenue Code. (B) Notwithstanding § 8-36-904 or any other law to the contrary, any political subdivision described in subdivision (a)(2)(A) shall set the employee contribution rate for its employees at the same rate as required under the political subdivision's preexisting plan. The political subdivision shall submit to the retirement system a duly executed adoption resolution as provided in subdivision (a)(1) prior to the political subdivision's effective date of participation in the hybrid plan, which must be approved by the board of trustees. If the employee contribution rate is set at an amount less than five percent (5%) of the employees' earnable compensation, the four percent (4%) employer contribution rate described in § 8-36-922 shall be increased by the percentage difference between five percent (5%) and the employee contribution rate. (3) (A) Except as provided in subdivision (a)(3)(B), any current or former member of the retirement system or of a superseded system who accepts, or is elected to, a position on or after July 1, 2018, for which membership in the hybrid plan is otherwise optional pursuant to subdivision (a)(1) shall become a member of the hybrid plan as a condition of employment. (B) Subdivision (a)(3)(A) shall not apply to an employee having optional membership who was employed by a political subdivision on the date the political subdivision elected to extend retirement coverage to the employee, unless the employee was a member or former member of a preexisting defined benefit plan maintained by that employer. Subdivision (a)(3)(A) shall also not apply to retired members of the retirement system who return to service in a position covered by the retirement system as provided in § 8-36-805 , § 8-36-818 , or § 8-36-821 . (4) Any person who is employed by a political subdivision that is admitted into the hybrid plan on or after July 1, 2016, and who has optional membership pursuant to this section, shall, upon the date approval is given, file an irrevocable election to become or not to become a participant in the hybrid plan. Any employee of a political subdivision who had optional membership in the hybrid plan on June 30, 2016, and who has not elected to participate, shall, by no later than October 31, 2016, file an irrevocable election to become or not to become a participant in the hybrid plan. The elections provided for in this subdivision (a)(4) shall be made in the manner prescribed by the retirement system and shall be filed with the retirement system. The elections provided for in this subdivision (a)(4) shall not include any option for the employee to have a cash or deferred election right with respect to designated employee contributions and the employee contributions shall be picked up in accordance with § 8-36-904(b) . (b) Except as otherwise specifically provided in this part, any political subdivision electing to participate in the hybrid plan pursuant to this section shall participate in the provisions of the plan as they exist for state employees on the date of participation or at any other given time pursuant to any changes made pursuant to §§ 8-36-921 and 8-36-922 ; provided, however, that any subsequent changes that increase the liability of a participating political subdivision within the meaning of Constitution of Tennessee, Article II, § 24 shall not apply to the political subdivision unless the chief governing body of the political subdivision agrees to such changes and accepts the liability therefore. Notwithstanding this subsection (b), the following provisions shall remain optional to political subdivisions: (1) Part-time, seasonal, or temporary employee service credit in accordance with § 8-34-621 ; and (2) Mandatory retirement in accordance with § 8-36-205 . (c) A political subdivision already participating in the retirement system under one of the additional plans afforded under chapters 34-37 of this title may change from that plan to the hybrid plan on a prospective basis by passage of a resolution pursuant to subsection (a) above. Any such resolution shall set forth the effective date of the change; provided, that the date shall be on the first day of any quarter following a minimum of six (6) months' notice to the retirement system. The actuarial value of accrued benefits earned by employees of the political subdivision prior to the effective date of the change shall remain an enforceable right and may not be reduced or otherwise forfeited except by the consent of the employee or in accordance with § 8-35-124 . (d) Any political subdivision that participates in the hybrid plan shall have the right to change from the hybrid plan to any of the additional plans afforded to the political subdivision under chapters 34-37. Any such change shall be in accordance with and subject to the terms and conditions of §§ 8-35-253 - 8-35-256. In addition, any political subdivision that participates in the hybrid plan shall be subject to the withdrawal provisions of §§ 8-35-211 and 8-35-218 . Benefits accrued under the hybrid plan or under any of the plans adopted pursuant to §§ 8-35-253 - 8-35-256 shall be in accordance with 26 U.S.C. § 411 . Notwithstanding this section or any other law to the contrary, the cost-of-living provisions of § 8-36-701 shall not be deemed an accrued benefit and may be subject to change pursuant to this section and §§ 8-36-921 and 8-36-922 . (e) Notwithstanding this section or any other law to the contrary, a political subdivision may authorize its county judges to participate in the hybrid plan under the same provisions governing state judges as set forth in this part provided the political subdivision authorizes and pays for the cost of an actuarial study to determine the liability associated with such membership and, following review of the cost of such membership, the chief governing body of the political subdivision passes a resolution authorizing the membership and accepting the liability therefor. In addition, a political subdivision may authorize its county judge to participate in the hybrid plan under this subsection (e) without extending retirement coverage to its other employees provided the political subdivision authorizes and pays for the cost of an actuarial study to determine the liability associated with such membership and, following review of the cost of such membership, the chief governing body of the political subdivision passes a resolution authorizing the membership and accepting the liability therefor. The retirement system shall not be liable for the payment of retirement allowances or other payments on account of such membership for which reserves have not been previously created from funds contributed by the political division and/or its county judges. It is the legislative intent that the state shall realize no increased cost as a result of this section. All costs associated with retirement coverage, including administrative costs, shall be the responsibility of the political subdivision. (f) Notwithstanding this part or any law to the contrary, a political subdivision that extends retirement coverage to its employees under this section may elect to provide its own profit sharing and/or salary reduction plan that is authorized under § 401(k) of the Internal Revenue Code ( 26 U.S.C. 401(k) ) in lieu of participating in the state's profit sharing and/or salary reduction plan established under chapter 25, part 3 of this title; provided, that the political subdivision makes mandatory contributions to such plan on behalf of each of its employees participating in the hybrid plan, regardless of whether the employees make any employee contributions to that plan. The amount of the employer contributions shall be five percent (5%) of the respective employee's salary unless suspended or reduced pursuant to § 8-36-922 . (g) Any political subdivision that participates in the hybrid plan that previously participated in the retirement system under the plan afforded under chapters 34-37 of this title that was established on July 1, 1972, may, by resolution legally adopted and approved by its chief governing body, authorize its current employees who continue to participate under the previous plan the option to transfer from the previous plan to the hybrid plan on a prospective basis, but only under the following conditions: (1) The employee contribution rate in the previous plan must be the same as the employee contribution rate required under the hybrid plan; (2) The election shall not include any option for the employee to have a cash or deferred election right with respect to designated employee contributions, and the employee contributions shall be picked up in accordance with § 8-36-904(b) ; (3) The option to transfer to the hybrid plan must meet all applicable state and federal requirements, including § 414(h) of the Internal Revenue Code ( 26 U.S.C. § 414(h) ), that are necessary for the hybrid plan to maintain its status as a qualified plan under the Internal Revenue Code; (4) The election to transfer shall be made in the manner prescribed by the retirement system and filed with the retirement system; (5) The election shall become effective on the first day of the month next following the month the election is filed with the retirement system; (6) The actuarial value of accrued benefits earned prior to the effective date of the transfer shall be determined under the applicable provisions of the previous plan in effect on the date of the transfer; and (7) Any employee who elects to transfer shall be subject to the applicable provisions of this part on and after the effective date of the transfer.